Donald Trump is expected to announce a trade agreement with the UK on Thursday, according to people familiar with the matter, in a limited deal that may nonetheless signal the direction of the US president’s global trade war.
Trump teased the announcement in a social media post on Wednesday night, saying he would hold an Oval Office news conference to discuss “a MAJOR TRADE DEAL WITH REPRESENTATIVES OF A BIG, AND HIGHLY RESPECTED, COUNTRY.” While the details weren’t immediately clear, American and British officials were in talks this week about plans to reduce tariffs on cars and steel, among many levies imposed by the US president on allies and rivals alike in recent weeks.
Subscribe to the Bloomberg Daybreak Podcast on Apple, Spotify and other Podcast Platforms.
During a speech in London to mark the 80th anniversary of the end of World War Two, Prime Minister Keir Starmer said he’d provide an update on US talks later Thursday, while a British official signaled Trump’s announcement is expected to be about the agreement with Britain.
“Make no mistake, I will always act in our national interest for workers, business, and families to deliver security and renewal,” Starmer said, describing the US as “indispensable” to Britain’s economic and national security.”
Optimism that a deal will be positive for the UK economy lifted stocks and the pound. Sterling gained against the euro and outperformed all Group-of-10 peers except the dollar, while the FTSE rose 0.3%. Gilts were broadly steady at the open, slightly bettering peers, as traders awaited the Bank of England interest-rate decision later on Thursday.
The US president has faced political pressure to find an off-ramp from his plan to raise US tariffs to their highest level in a century, as polls show Americans souring on his economic stewardship. Trump signaled the deal he’ll discuss would be the first of many as he looks to topple barriers to US exports and calm market turmoil driven by the sweeping scope of his tariffs.
“This announcement is likely just an agreement to start the negotiations, identifying a framework of issues to be discussed in the coming months,” said Tim Brightbill, a trade attorney at Wiley Rein LLP. “We suspect that tariff rates, non-tariff barriers, and digital trade are all on the list — and there are difficult issues to address on all of these.”
Big Caveats
Any agreement would come with significant caveats. Full-scale trade pacts typically take years to negotiate, and talks with several nations have centered around, at best, a top-line deal on commitments and intentions that may leave many details traditionally included in comprehensive trade agreements to be negotiated later.
Talks with the UK have focused on a few areas such as tech and AI, with Starmer’s Labour government keen to reduce the scale of US tariffs — particularly the 25% rate on British cars and steel. With the Trump administration conducting an investigation into the pharmaceutical industry, Britain is also seeking to avoid the prospect of tariffs on drugs — a major export to the US.
While the scale of a pact is likely to be limited, it would give a boost to Starmer, whose administration announced a more comprehensive trade deal with India on Wednesday. Starmer has tried to maintain close and warm relations with Trump, holding regular phone calls and promising a second state visit to the UK — partly in the hope of securing lower tariffs than those imposed on other peer countries.
That approach has had mixed success. The UK was given the lowest rate of tariffs, with 10% across most goods, yet was subsequently left no better off than EU countries when Trump temporarily cut their rate. In recent days, the US president has proposed tariffs on the film industry — a major UK export. An expansion of tariffs beyond goods is ominous for the British economy, which is dominated by its service sector.
The White House didn’t immediately respond to a request for comment on the country involved or scope of any potential deal. The UK embassy in Washington also did not immediately respond to a request for comment.
The White House’s public schedule for Thursday, released late Wednesday after Trump’s post, simply describes the event by saying “THE PRESIDENT makes a Trade Announcement.” The New York Times first reported it would be with the UK.
Trump administration officials are conducting a flurry of simultaneous negotiations with a range of countries, after the president paused sweeping tariffs on more than 50 economies that have substantial trade deficits with the US announced as part of his April 2 “Liberation Day” tariff offensive, as well as a global 10% levy applied to nearly all US trading partners. The White House has also issued sectoral tariffs including on steel and automobiles, and threatened more besides on a wide range of industries from pharmaceuticals to lumber to foreign-made movies.
Trump has offered few indications about the outlines of an acceptable trade deal, though aides have indicated that initial announcements are likely to serve as frameworks for additional negotiations down the road.
Britain announced a major new trade deal with India on Tuesday, the largest the UK has signed since it left the European Union, as it seeks to deepen economic ties with other nations amid the Trump tariff fallout. Economists, including senior BOE officials, have warned that a widespread trade war would hurt the UK even if it secures lower tariffs from the White House — largely as a result of the open nature of Britain’s economy.
Other nations with talks at high levels include Japan, India and Israel. Trump surprised Japanese negotiators by personally joining in talks last month, while Vice President JD Vance traveled to India for discussions that included trade.
While any announcement is likely to buoy markets, investors will be watching closely to see the extent to which Trump is willing to backtrack from the sweeping tariffs imposed on April 2. The US president has also repeatedly refused to say if he would be willing to negotiate tariff rates below the 10% baseline rate he imposed on nearly all nations earlier this year.
And negotiations with China, the world’s second largest economy remain at a nascent stage. Trump said earlier Wednesday he was unwilling to preemptively lower tariffs on China in order to unlock more substantive negotiations with Beijing on trade.
“No,” Trump said Wednesday when asked by a reporter if he is open to pulling back his 145% duties on Chinese imports.
--With assistance from Simon Kennedy, Alex Wickham, Hadriana Lowenkron, Lianting Tu, John Harney, Meghashyam Mali and Justin Sink.
(Updates with Starmer remarks in third paragraph.)
